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Mexico one country, two Presidents: Lopez Obrador is in no mood to wait his turn

ejecentral

Andres Manuel Lopez Obrador
. Landslide election winner won't take office until December. But he's already set to push new agenda on oil, trade, budget

By Nacha Cattan and Amy Stillman

MEXICO CITY
Petroleumworld 07 17 2018

Mexican political meetings have their rituals. Andres Manuel Lopez Obrador didn't bother with them.

The first time Lopez Obrador sat down with his transition team after his historic election win, he launched right into a four-hour speech. He didn't stop for food, coffee, even water. Aides say they kept expecting him to call a break. It never came.

By the end, his audience was clear on one thing. Mexico's left-wing leader-in-waiting may not take office until December. But he plans to start advancing his agenda with immediate effect. On everything from Nafta talks to oil auctions to next year's budget, he'll essentially be co-running the country.

“He's completely overshadowed the current government, and there's a sense he's now a participant in decision-making,'' said Andrew Selee at the Migration Policy Institute in Washington. “It was such a dramatic victory. The energy is entirely with the new government.''

Me Too

That was apparent last week when the Lopez Obrador camp announced he'd be meeting visiting U.S. dignitaries including Secretary of State Mike Pompeo. Only later did confirmation arrive from the office of the outgoing president (whose poll ratings are stuck near record lows): Yes, Enrique Pena Nieto would be holding talks with the Americans too.

And AMLO isn't even Mexico's president-elect yet, officially speaking. That step could come any time before Sept. 6, the electoral court's deadline for ratifying vote results.

The expectation is that the court won't wait that long. Past counts have been contentious, but there are no question-marks lingering over this one. Lopez Obrador crushed his business-friendly rivals, winning more than twice as many votes as the runner-up.

The court's declaration will mark the beginning of the formal transition period. That's when Lopez Obrador says he may start reviewing a project he's lambasted for wasting government money: a $13 billion new airport for Mexico City.

Won't Go Anwhere

His first impact on Nafta negotiations could come around the same time. When talks resume, possibly in August , Lopez Obrador's people are set to be included.

“Not in a formal role, but in a consultative role,'' said Selee. Even if the outgoing administration remains in charge on paper, he said, “whatever they agree to has to be approved by the new government. Otherwise it's not going to go anywhere.''

Lopez Obrador has attacked Nafta's impact on Mexican farmers. He promises to rev up the domestic engines of growth, with higher government investment and social benefits, and less emphasis on exports. But he's also vowed to stay in the trade accord.

Perhaps the key transition date will be Sept. 1, when the new congress is sworn in. AMLO's Morena party-led coalition won majorities in both houses.

Last week he set out measures he'll send to the legislature. Among them were the removal of immunity for elected officials, a higher minimum wage in border areas, and scholarships for low-income students. Work could get under way before the inauguration.

‘Smooth as Possible'

AMLO may not push too hard, according to Oscar Mendoza, an analyst with Mexican political consultancy Pauta Politica.

“That doesn't mean he won't apply pressure,'' Mendoza said. But the outgoing and incoming teams have signaled that “they want a transition that's as smooth as possible.''

He cited a landmark Pena Nieto policy: Energy privatization. Lopez Obrador has slammed the leasing of drilling rights to private and foreign companies, and says he'll audit their contracts, though he's promised that there will be no expropriations.

On Sept. 27, Mexico is due to auction more than 40 areas for exploration, some of them in the shale gas-rich Burgos Basin. A month later, state oil company Pemex -– which looms large in Lopez Obrador's economic plans -– is supposed to take bids from private companies for partnerships in seven onshore areas.

It's “not in his power yet” to halt those auctions, said Mendoza, but AMLO may seek to impose some conditions -- chiefly “that it be done as publicly as possible.''

‘This Is Bigger'

In an interview, Juan Carlos Zepeda, the commissioner for Mexico's energy regulator, didn't rule out a change of dates or terms, saying that it's happened before.

“But it has to be done through the correct channels,'' he said. In the October farm-out, that would mean that “Pemex has to ask for it.''

For Lopez Obrador's economic team, the main priority is the 2019 budget .

Due to be submitted in mid-December, it's likely to be his first high-impact move as president -– and one watched closely by markets. They're wary that Mexico under AMLO could follow the deficit-spending path that devastated the economies of Argentina and Brazil. On the morning after elections, with counting still under way, his economists held a conference call with investors to outline the plans.

None of this is entirely normal for an interregnum in Mexico. But then, it wasn't a normal election. Mexicans haven't voted left for decades. They've rarely granted any leader a mandate on this scale. For almost a century, the country has been run exclusively by the two parties whose nominees were so decisively defeated by Lopez Obrador on July 1.

“This is not just a routine handover to a different candidate or party,'' said Selee. “There's a sense that this is a bigger transition.''

— With assistance by Eric Martin

_________________________

Story by Nacha Cattan and Amy Stillman from Bloomberg.

bloomberg.com 07 16 2018

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